Ask Andy: What aspects can affect an IR35 assessment?
This month, Andy’s received quite a few questions on which particulars of an engagement can affect an IR35 assessment. It can, after all, be a minefield – especially if your client wants you to take part in some training or use a particular piece of kit that you are concerned could negate your entire IR35 status. The good news is that Andy Vessey, Kingsbridge’s Head of Tax, has some answers that could prove very helpful.
At the end of the questions and answers, we’ve included some info on how you can send your own question to Andy, should you need to.
This article is for information purposes only and should not be seen as financial advice. You should always consult with your accountant for any tax advice.
My client wants to end my current contract and put me on a zero-hours contract as they seem to believe that this will remove any IR35 risk for them. Can a zero-hours contract be considered as outside IR35?
There does exist a view in some quarters that a zero-hours contract is not a contract of employment but this will depend on the facts. While there may be an absence of mutual obligations in the overarching agreement between you and your client, nevertheless there could exist obligations when you are actually working. Given the recent ruling in the Professional Game Match Officials Ltd case by the Court of Appeal, it might be somewhat risky to simply rely on the mutuality of obligation test alone to determine your employment status, although the matter has been referred back to the First-tier Tax Tribunal. However, if your client is a medium/large-sized business then the tax and NIC risk sit with them and not you, should they get it wrong.
I have been asked by the company with whom I am contracted to complete their ethics training course. While I understand the logic and reasonableness of this, it is primarily directed at employees. If I complete it, does it affect my IR35 assessment?
If the course is being paid for by your client and you are also being paid during the course time, then this could suggest you are being treated similarly to the client’s employees and therefore may be integrated into the client organisation and that some mutuality of obligations exists. However, if it is wholly necessary for you to undertake this course to properly perform the services, and your PSC pays for the course and receives no fee whilst you are undergoing such training, then this will have no detrimental IR35 effect.
Having said all this, despite whatever the circumstances mentioned above, if you have stronger factors in your favour, such as an absence of personal service and have a high degree of control over the manner in which you carry out the work, then you should be safely outside IR35 regardless.
Does the consultant use equipment (such as a laptop) supplied by the limited company?
I’m not sure from your question what you are actually enquiring but if you implying where a contractor has to use equipment supplied by the end client then is this a pointer towards employment, then the answer is ‘no’ where such equipment has to be used because of security, data sensitivity issues etc. In this case, the equipment test is neutral.
However, where a contractor uses their own equipment that is integral to the completion of the services then this will be a pointer towards self-employment. However, HMRC seek to dismiss laptops as meeting this test but this cannot be right where a worker is required to, and does, provide major and essential items of equipment which are a fundamental requirement of the contract and sufficiently important to affect the substance of the contract. In general, this test should not be relied upon alone to determine whether or not a contract is ‘inside’ or ‘outside’ of IR35.
How to Ask Andy
If you’d like to send your own IR35-related question to Andy, whether it’s big or small, you can do so using our easy online form.
In the meantime, if your questions revolve around whether you fall inside or outside IR35 for a particular engagement, you may be able to have them answered more quickly and specifically by using the Kingsbridge IR35 Status Tool. With the question set being developed by Andy himself, the result of his twenty-plus years of experience with IR35 legislation, the Status Tool asks you a series of yes-or-no questions about your contract and working practices. This will give you an instant, accurate inside or outside IR35 result in an instant. If your status is indeterminate and unclear, then your case is passed to one of our in-house IR35 experts for a manual review so, when you get your IR35 status, you can be confident that it’s an accurate determination. All this peace of mind for just £50 plus VAT.